The London Stock Exchange is preparing its response to the threat of competition from brokers and investment banks and will issue a consultation paper in the ânext few weeksâ.

An LSE spokeswoman said the exchange has been talking to customers about opportunities arising from European Commission trading rules that take effect in November and is preparing to submit its plans to users.

The move comes 10 weeks after seven of the LSE’s biggest investment banking clients, which between them control half of Europe’s equities business, announced the start of Project Turquoise, a trading platform due to launch after the introduction of the markets in financial instruments directive on November 1.

Mifid outlaws rules mandating fund managers and brokers to trade and report through European stock exchanges and is expected to lead to an explosion in off-exchange trading – “dark liquidity” – in alternative trading systems and quasi-exchanges such as Turquoise.

The LSE has pledged to slash trading fees to limit the impact of the new rules, while rival Euronext last week detailed its plan to deliver a range of technology services, focused on algorithmic trading, trade reporting and regulatory reports.